Advertising Law Alerts

November 10th, 2017

New Low-Budget Waiver is Now Available for Digital Commercial Productions

Advertisers and agencies that are signatories to the SAG-AFTRA Commercials Contract (the "Commercials Contract") can now take advantage of a new waiver issued by SAG-AFTRA (the "Union") and the Joint Policy Committee on Broadcast Talent Union Relations (the "JPC") when producing low-budget digital commercials. When it applies, the waiver allows producers to freely negotiate all session and use fees payable to performers rather than pay the standard minimum rates set forth in the Commercials Contract.

This is big news. The timing of a waiver of this importance and scope --- in the middle of the term of the existing contract --- took many by surprise. In a joint statement announcing the waiver, the Union and JPC stated that they believed the waiver was necessary both to offer relief to signatory ad agencies that are losing clients to non-signatory competitors on digital work and to provide more opportunities for employment for SAG-AFTRA members.

As always, the devil is in the details. Shortly after announcing the new waiver, the Union and JPC released a set of FAQs to provide additional guidance. Here are some key points to remember if you are producing commercials under this waiver:

• The waiver applies to commercials made for the Internet and New Media platforms, including social media, that have a production budget of $50,000 or less per commercial. Production line costs count towards the $50,000 budget, including talent session fees and director, producer, props, wardrobe, and location costs. Post-production costs (including, for example, editorial, agency travel, dub and shipping costs) do not.

• Where a single production budget covers multiple digital and non-digital productions, producers should use "commercially reasonable efforts" to determine the portion of the budget attributable to the digital commercials to determine eligibility for the waiver.
• If a force majeure event causes the production cost to exceed $50,000, the producer does not lose the waiver.

• The maximum period of use for commercials produced under this waiver is one year from the date of the session. The parties can negotiate fees for usage beyond the one-year period, but they can't do so up front.

• The talent cannot be held to any exclusivity.

• In addition to being able to freely negotiate session and use payments, amounts owed for overtime, meal penalties, rehearsals, and travel are all negotiable. (By contrast, according to the Union, audition overtime should be paid per the standard rates in the Commercials Contract since, at that time, the performer has not yet been engaged, and the compensation has not yet been negotiated.)

• The number of edits for all commercials produced under the waiver are freely negotiable.

• If a producer later wishes to use a spot produced under this waiver in a different medium (such as on television or for an industrial use), the standard use fees are payable to the performer.  In addition, consent of the performer is required if the producer wants to use the spot on television (since it is possible that the talent may have secured a gig with a competitor and is bound to an exclusivity commitment).

• No advance approval is needed from the Union, and there is no need to send the Union a copy of the commercial, unless they request one in connection with a claim. Likewise, budgets need not be shared with the union unless they request to see them to verify applicability of the waiver.

• Producers can hire non-professional performers but they will have to file standard Taft-Hartley paperwork; however, the fine has been waived.

• The waiver is only available to Joint Policy Committee authorizers and ad agencies and advertisers who are signatories to the Commercials Contract, but not to third party signatories.

Click here for the full text of the Low Budget Waiver and FAQs.

If you have any questions about this news, details about the Commercials Contract, SAG-AFTRA, or any other advertising or marketing law issues, please contact Brian Murphy at (212) 826 5577 or bmurphy@fkks.com, Terri Seligman at (212) 826 5580 or tseligman@fkks.com, Rayna Lopyan at (212) 705 4842 or rlopyan@fkks.com, or any other member of the Frankfurt Kurnit Advertising, Marketing & Public Relations Group.